The overall risk of future house price decline slipped in the first quarter of 2010 (Q110), compared with the previous quarter, according to the latest data from PMI Mortgage Insurance Co. — the principal operating subsidiary of The PMI Group (PMI). Despite the results, PMI finds that more than half of MSAs still remain at high risk of house price decline. The Q310 market risk index, which uses Q110 data, dropped to 51.9 from 53.8. The score indicates the probability (from zero to 100) that the price of homes will on average be lower after two years. And while the risk of declines is less, economic analysts say house prices will likely continue to drop. It marks the third consecutive quarterly decrease after the risk of continued price declines shrunk in most metropolitan areas in the Q210 report. The number of metropolitan statistical areas (MSAs) reporting lower risk scores declined in Q110 compared with the previous quarter. This reflects a decrease in affordability and higher mortgage rates during Q110 compared with Q409, PMI said. Although 75.5% of the MSAs studied for the report are less risky than the previous quarter, more than half — or 51.6% — remain in the high-risk category: High-risk MSAs tend to have higher unemployment and foreclosure rates, lower affordability levels and a larger excess of housing supply and more volatile housing prices compared with minimal- and moderate-risk MSAs Of the nation’s top metro areas, 28 MSAs scored within the highest risk category of 70-100. Seven scored in an “elevated” risk category between 50 and 70, six had moderate risk scores between 30 and 50, eight had low risk between 30 and 10 and one — Columbus, Ohio — had a minimal risk score under 10. “Household formation is the most important demographic driver of housing demand and faster growth, as has occurred over the period since the middle of 2009 corresponding to a pickup in the economy, should lead to greater market stability,” said PMI chief economist David Berson. “Ultimately greater stability of house prices will lead to declines in the Risk Index.” Write to Diana Golobay. Disclosure: The author holds no relevant investments.